Viewpoint: US LNG first wave complete in 2020

Market: Natural gas
02/01/20

The six projects comprising the first wave of US LNG exports are scheduled to be fully operational in 2020, culminating a massive $63bn buildout over the last several years that has revolutionized the global gas industry.

The prospects for an expected second wave of US LNG exports should become clearer later this year when a number of proposed projects are expected to make funding decisions for projects that would come on line in the early- to mid-2020s.

The ongoing US-China trade war will make it more difficult to fund second-wave projects if it is not resolved, as China is expected to be the fastest-growing LNG market in the foreseeable future. An interim agreement announced in last month did not include reductions to the 25pc tariff that China imposes on US LNG and propane, although Beijing said it would buy more US energy commodities "if needed" and based on "market principles."

Cheniere Energy first proposed exporting LNG from the contiguous US in June 2010 from its existing Sabine Pass LNG import terminal in Louisiana, as it faced potential bankruptcy because the US shale gas boom had virtually eliminated demand for LNG imports. The move was met with widespread skepticism, but this year the US became the world's third-largest exporter behind Qatar and Australia, surpassing Malaysia.

Combined feed gas to US LNG export plants averaged 7.68 Bcf/d (217mn m³/d) in December, about 8.1pc of the record US dry-gas production of 95 Bcf/d reached in October. US output is forecast to remain near those levels throughout the winter. Combined gas feed has averaged 8.31 Bcf/d so far in January.

Sabine Pass started exporting in February 2016 and is now the largest US gas consumer, processing an average of 3.89 Bcf/d in December and 4.04 Bcf/d so far this month.

All six US facilities are producing and exporting LNG, with Cameron LNG in Louisiana, Freeport LNG in Texas and Elba Island LNG in Georgia scheduled to bring their respective final first-wave liquefaction trains on line in 2020. When that process is complete, US baseload liquefaction capacity will be equivalent to 8.8 Bcf/d of gas and peak capacity will be equivalent to 10.4 Bcf/d.

Some second-wave projects have already been funded and are in construction, while others are expected to be funded in 2020. Cheniere is building two additional 5mn t/yr trains, one at Corpus Christi, Texas, scheduled to come on line in 2021, and the other at Sabine Pass, scheduled to start operating in the first half of 2023. In addition, in 2019 Venture Global funded its $7.1bn, 10mn t/yr Calcasieu Pass LNG project in Louisiana, scheduled to come on line in 2022.

The first wave of US projects significantly changed global contracting by selling supplies at Henry Hub-based prices with a flat liquefaction fee of about $3/mmBtu, rather than the traditional model of linking long-term LNG contracts to oil prices.

Cheniere hopes to in 2020 fund a seven-train, 11.45mn t/yr expansion at Corpus Christi that would be partly financed by US Permian basin producers.

Tellurian plans to finance its $15.2bn, 27.6mn t/yr Driftwood LNG project in Louisiana by selling customers equity at $500mn for offtake of 1mn t/yr, which Tellurian claims could lower free-on-board costs to $2.85/mmBtu with cheap Permian gas at $1/mmBtu.

NextDecade plans to fund this year its 27mn t/yr Rio Grande LNG project in Texas with a combination of contracting based on oil, Henry Hub and western European gas hub pricing.

Other projects that planned to make investment decisions in early 2020 include the 5mn t/yr Freeport LNG train 4 in Texas, the 6mn t/yr Annova LNG project in Texas, the 4mn t/yr Texas LNG facility, Venture Global's 20mn t/yr Plaquemines project in Louisiana, Sempra's 2.5mn t/yr Energia Costa Azul project in northwest Mexico that would use US gas, and Sempra's 13.5mn t/yr Port Arthur LNG project in Texas.

By Ron Nissimov

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12/11/24

Finnish, Baltic gas demand falls on year in October

London, 12 November (Argus) — Aggregate Finnish and Baltic gas consumption dropped by nearly 24pc on the year in October, but still reached a six-month high as the heating season began. Combined demand in Finland, Estonia, Latvia and Lithuania last month rose to 3.19TWh from 2.61TWh in September , in line with the typical seasonal progression, but was well below the 4.18TWh consumed a year earlier and the average of roughly 5.2TWh in 2018-21 ( see consumption graph, data and download ). Demand in all four individual countries was lower on the year, with the biggest drop in Lithuania, where consumption fell by more than 600GWh. In October 2023, the region's biggest consumer Achema had briefly resumed full production at both of its ammonia production units at Jonava , boosting Lithuanian demand that month. Despite the year-on-year drop, this was the fifth consecutive month-on-month increase after demand hit a near two-year low in May. Cumulative demand in the first 10 months of the year totalled 35TWh, well up from 30.3TWh a year earlier. That said, strong demand in the first quarter when the region experienced a prolonged cold snap supported a slightly skewed figure. If only considering April-October, demand of 18.5TWh was slightly below last year's 18.9TWh and well under the 30TWh average in 2018-21. This may indicate a more structural decline in the region's gas demand, particularly with power-sector demand falling as higher nuclear and renewables output cuts into the room left available for gas in the generation stack. Gas-fired power generation in the four countries totalled 186GWh last month, Fraunhofer ISE data show. This was well below 307GWh in October 2023, and the second lowest for any October since at least 2018 ( see gas-fired power graph ). Gas-fired output was lower on the year in all four countries, with roughly 40GWh drops in Lithuania, Finland and Latvia. Onshore wind production in Finland, by far the region's largest overall power producer, jumped by more than 1TWh on the year, more than offsetting lower nuclear and hydro output. This allowed Finland to net export around 150GWh of power, having net imported nearly 300GWh in October 2023, according to Fraunhofer data. Prices on the regional GET Baltic exchange averaged €41.74/MWh in October, up by 3pc on the month but 18pc down on the year. The price on the exchange "increasingly correlates with" the TTF, a correlation that will likely strengthen as GET Baltic trading migrates to the larger EEX platform next year , chief executive Giedre Kurme said. This transition will "create opportunities for competition, more liquid trading and price convergence", and "we are already seeing increased interest from international participants in the Baltic-Finland region", Kurme said. Firms traded 708GWh on the exchange in October, the most for any month since February, and all transactions were on the daily market. The joint Latvian-Estonian market accounted for 43pc of total trades, followed by Lithuania at 31pc and Finland at 26pc, GET Baltic said. Maintenance continues to limit Finnish LNG sendout Extensive maintenance on the Balticconnector pipeline this month, which makes all southbound capacity from Finland towards Estonia unavailable, continues to limit sendout from Finland's Inkoo LNG terminal. After maintenance on the 14-27 October gas days took exit capacity towards Estonia fully off line, this capacity is again unavailable because of further maintenance on 4-17 November. Without southward pipeline capacity, sendout from Inkoo must fall to levels that only the domestic market can absorb. Inkoo received the 145,000m³ Arctic Princess just before the maintenance started on 3 November, and the next scheduled delivery is not until 28 November ( see LNG data and download ). Sendout is likely to remain low even after the end of maintenance so as not to fully deplete stocks before the next arrival. Sendout from Inkoo averaged 23 GWh/d on 4-11 November. In contrast, sendout from Lithuania's Klaipeda terminal has jumped to 104 GWh/d this month, helping to plug the Baltic supply gap left by no southward inflows from Finland. Sendout from Klaipeda has been higher this month than the 85 GWh/d in October and 80 GWh/d on 1-11 October last year. Klaipeda has already received two cargoes this month, on 4 and 12 November, and will receive a further two on 21 and 29 November, the terminal's schedule shows. This suggests that sendout is likely to remain brisk for the rest of this month, helping to meet higher regional demand as the weather turns colder and limits the need for strong withdrawals from storage early in the winter season. By Brendan A'Hearn FinBalt gas consumption by country GWh Gas-fired power generation by country GWh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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12/11/24

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12/11/24

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12/11/24

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Record Permian volumes lift US oil majors

11/11/24

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11/11/24

Record Permian volumes lift US oil majors

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